Steel Aid on Minds of Textile States

Newsday ^ | March 20, 2002 | PAUL NOWELL -- AP Business Writer

[Willie Green]

CHARLOTTE, N.C. -- When North Carolina Gov. Mike Easley holds a textiles summit with governors of three other Southern states, the chief topic will be what can be done to save a floundering industry that could be on the verge of collapse.

In the back of everyone's mind will be the White House's recent initiatives to salvage a similarly struggling U.S. steel industry, which also had sought government intervention to prevent what many called unfair foreign trade practices from bankrupting more American steel companies.

[Willie Green]

Related threads:

Congressman's Deminted View Of Textiles

Gov. Hodges Talks Textiles In Enoree ,South Carolina

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Bush's action's are a step in the right direction, but still inadequate due to inconsistancy.

The optimal solution is a relatively low, across-the-board revenue tariff of 10-20% on ALL imported goods from ALL foreign countries.

"Targeted" tariffs have the disadvantage of providing loopholes and, as others will be quick to point out, the potential to hurt other domestic industries.

A prime example is our failed embargo on the importation of Cuban goods. Cuban sugar has been routinely imported to the U.S. through the back door: Canada. Cuban sugar is shipped to Canada where it is dissolved in molasass. "Canadian" molasass is then legally imported to the U.S. where the sugar is easily refined back out. The leftover molasass is then exported back to Canada where the cycle is repeated. Large sugar-users (such as candy makers) are also closing their domestic factories and moving to Canada where they can legally use Cuban sugar, then import it as candy to the U.S.

An across-the-board revenue tariff of 10-20% would circumvent this type of abuse. Additionally, the revenue could be used to offset a major reduction or elimination of the corporate income tax, providing domestic producers a more "level playing field". (A Proposal to Abolish the Corporate Income Tax)

From a historical perspective, a revenue tariff of 10-20% is NOT excessive:

[LarryLied]

Here we go. Billionaire textile magnate Millikan sees an opening. Watch for a bill he and Pat Buchanan got Jesse Jackson Jr. to introduce a while back to return. It kept high tariffs on African woven goods in return for $700 million in foreign aid to Africa.

A wonderful deal for Millikan. He cuts out competition but consumers pay twice. Once for higher priced textiles and once again in taxes for aid to Africa.

[Pamlico]

The way to replace those jobs lost is to promote low income, sales and property taxes. Of course what Gov. Weasley has done for NC is to raise taxes and suppress job creation. He is proposing big government spending that will never solve the problem. Someone needs to remind these idiots that the textile industry left New England for the South over a century ago for cheap labor, land, power and taxes. Nobody should now be surprised that they are leaving. BTW, my maternal grandparents were textile workers in Gastonia. All but one of their 9 children found much better careers in other fields.

[Willie Green]

A wonderful deal for Millikan. He cuts out competition but consumers pay twice.

There are many textile firms in the U.S. besides privately held Milliken.

Nevertheless, Roger Milliken's position in the industry is to be admired due his commitment to high quality and production utilizing the most modern and efficient equipment available.

[LarryLied]

And the millions he gave Pat Buchanan.

[billbears]

Came from the same textile background myself. My father worked in high school at Wicks (I think) in Gastonia and his parents were in the textile industry over towards Stanley. I truly feel for those workers that are being laid off, but I don't think a protectionist tariff is going to help them or the steel workers

[Fish out of Water]

index bump

[dead]

Bush really opened the floodgates now!

Every unemployable boob with the limited skill set of an eight-year-old Nicaraguan girl will be reaching into my pocket for some of my hard-earned cash.

If I wanted a union suck-up to hand out my money like candy, I would have voted for Nader or Buchanan.

[fporretto]

May I throw in a link?

Selection At Work

Freedom, Wealth, and Peace,
Francis W. Porretto
Visit The Palace Of Reason: http://palaceofreason.com

[Willie Green]

Mr. Porretto, what is your opinion of a government that subjects its own industries to a wide variety of costly rules and regulations, then permits those same industries to be undermined by "competition" that doesn't observe an equivalent set of rules and regulations?

[Willie Green]

I would have voted for Nader or Buchanan...

Did anybody ever show you how to punch your paper ballot correctly?
(My guess is that you probably need assistance.)

[dead]

Voted on a modern electronic machine for Bush.

He's the one who seems to think he's Buchanan or Nader.

[fporretto]

Well, Mr. Green, I'd have to say that the rules and regulations, being the problem, are the things to address. In all probability, none of them have any Constitutional basis. Surely "regulating commerce among the several states" does not extend to dictating how steel shall be made, or by what persons, or in what sort of facility. More than that: I'd bet the rent that none of those rules were enactments of Congress, but rather were issued by some alphabet-agency such as EPA or OSHA. Therefore, they rest on no Constitutional authority -- nothing in the document gives Congress the privilege of delegating its legislative power -- and are wholly wrong.

I can't endorse tariffs as a curative. Even if their practical effect on the "protected" industry were not as pernicious as we know it to be, there's a moral issue: the "relief" they offer to the beleaguered industry is money taken from other people's pockets, by depriving them of the free man's right to trade with whomever he pleases. I have in mind an old document that declares the secession of a group of colonies from their "mother" country. One of the reasons given for secession was: "For cutting off our Trade with all Parts of the World."

Freedom, Wealth, and Peace,
Francis W. Porretto
Visit the Palace Of Reason: http://palaceofreason.com

[Willie Green]

I'd have to say that the rules and regulations, being the problem, are the things to address. In all probability, none of them have any Constitutional basis...
I can't endorse tariffs as a curative...
I have in mind an old document that declares the secession of a group of colonies from their "mother" country. One of the reasons given for secession was: "For cutting off our Trade with all Parts of the World."

Well, perhaps you should reacquaint yourself with some of those "old documents". You'll learn that tariffs are not only Constitutional, they were the preferred method of taxation as they were considered to be the least intrusive on people's individual freedom. Early excise taxes were also implemented, but extremely unpopular. The excise tax on whiskey even led to open rebellion.

[fporretto]

My dear fellow, I know the Constitution and the Declaration by heart. Yes, since Congress has the power to regulate commerce with other nations, tariffs are Constitutional, which cannot be said for the alphabet-agency regulation our domestic industries labor under. I just don't think tariffs are advisable as curatives for noncompetitive industries. They've always perpetuated and worsened the problem, at several points provoking armed insurrection as well.

Tariffs as revenue generating measures were always low, because we wanted the imports -- we wanted both to buy them and to tariff them. Tariffs as protectionist measures are always high, because the whole point is to keep the foreign goods out of the United States, sparing our domestic firms from competition. Therefore, they generate little to no revenue.

As Herbert Spencer and others have noted, "protection" for the manufacturer is "aggression" against the consumer -- and it tends to perpetuate itself indefinitely into the future.

Freedom, Wealth, and Peace,
Francis W. Porretto
Visit the Palace Of Reason: http://palaceofreason.com

[Willie Green]

Then you'd have no problem with a low revenue tariff of approximately 20% applied to all imported goods, coupled with abolition of the corporate income tax?

[fporretto]

A 20% tariff is probably far too high. I don't want to be doctrinaire about a particular figure, but speaking in general terms, the point at which an import tariff becomes a de facto protective tariff is the point where it wipes out the profit margin for the imported product, if the product is sale-priced competitively to the domestic equivalent. For a "basic" commodity like steel, that's probably less than 10%, possibly far less. It's something to be investigated carefully.

Have "trouble" with it? Well, truth be known, I have at least a little "trouble" with just about every kind of tax, but as long as taxation is the revenue source for government, we'll have to have some sort of taxes. I'd like to see a state of affairs where only the following sorts of taxes are considered thinkable:

• Import and export tariffs, kept as low as possible, the revenue from which would fund the federal government;
• A general excise on all written contracts, the revenue to fund state governments;
• Property taxes levied exclusively by county governments, to fund local courts, police, and emergency systems.

The nice thing, if I may put it thus, about those taxes is that the determined citizen can avoid paying any of them, if it matters that much to him. They all fall upon specified activities rather than upon persons. However, I'm under no illusions about how far they'd stretch; government would have to give up all its extra-Constitutional activities to fit into that revenue envelope. Of course, by my lights that's a huge spinoff benefit.

Freedom, Wealth, and Peace,
Francis W. Porretto
Visit The Palace Of Reason: http://palaceofreason.com

[Willie Green]

A 20% tariff is probably far too high. I don't want to be doctrinaire about a particular figure, but speaking in general terms, the point at which an import tariff becomes a de facto protective tariff is the point where it wipes out the profit margin for the imported product, if the product is sale-priced competitively to the domestic equivalent. For a "basic" commodity like steel, that's probably less than 10%, possibly far less. It's something to be investigated carefully.

By definition, revenue tariffs are not "protective" tariffs at any level. It is incorrect to begin adusting rates to the profit margin of any given commodity. At that point, they are no longer revenue tariffs, but "targeted" tariffs.

They only true economic concern with a revenue tariff's rate is that of maximizing revenue. Tariffs at any level will have a marginal propensity to discourage imports, but it is a nonlinear function. At very low rates, revenue can be increased with an increase in the tariff rate despite the marginal decline in imports. However, there comes a point when imports are inhibited so much that an increase in the tariff rate will produce a decline in revenue.

I honestly don't know exactly where this optimality point is, and chances are that it fluctuates with economic conditions. However, 20% does not seem too high from a historical perspective. If empirical data shows that 10% or 15% would be closer to optimality, that's fine with me.